The Energy Commission (EC) will embark on another round of bidding for power  purchase  agreements  (PPAs)  held  by  the  three  first-generation independent power producers (IPPs)  –  YTL Power, Powertek Sdn Bhd and Port Dickson Power Sdn Bhd –  that will expire between this year and 2016, said  its  chairman  Datuk  Abdul  Razak  Abdul  Majid.  Abdul  Razak  said  the extension of the existing power plants will hinge on the rates of the bidders. (Source: Financial Daily)

Comments:  We  view  this  positively  for  YTL  Power,  as  it  gives  the  group another  opportunity  to  extend  its  domestic  PPAs  that  are  expiring  in  Sep 2015.  Recall  that  YTL  Power  did  not  get  their  licences  renewed  in  2012. Based  on  our  scenario  analysis,  our  RNAV  of  YTL  Power  rises  from RM1.54 to RM1.84 assuming YTL Power receives a 5-year extension but with the same rates. Therefore, our pro-forma RNAV of YTL Power would adjust lower accordingly depending on how competitive YTL Power bids, if it chooses to. At this juncture, we maintain our Neutral rating on YTL Power with unchanged TP of RM1.54.

Source: Affin Hwang Capital Research - 11 Mar 2015